Oswald Gruebel and Brady Dougan, once colleagues and now heads of rival UBS AG (UBSN) and Credit Suisse Group AG (CSGN), are clashing over contingent convertible bonds -- a dispute that reveals how much UBS stands to lose.
Swiss regulators, spooked by the near collapse of UBS in 2008, may require the two Zurich-based lenders to sell the securities, known as CoCos, to avoid future bailouts. Gruebel has called the debt, which turns into equity when a bank’s capital drops below a certain level, “dangerous.” Dougan, who runs the firm Gruebel once led, sold the first CoCos last month.
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